A claim preparation clause provides coverage for the insured to engage a specialist claims professional to help prepare, present and settle large losses. This clause can be written into cargo policies as an extension to the existing cover.
This clause provides the insured with specific and a specialist skill-set to work hand in hand with JLT’s claims specialism to ensure, for the right type of loss, they are entirely represented.
This coverage has been commonplace in the USA, Asia and Europe for many years but UK insurers have been slow to catch up. Although still not uniformly available, it is gaining traction with many UK insurers now providing the cover.
It is understandably popular with insureds who appreciate the benefit of having professional support when a large loss occurs. Insurers are also recognising that it makes a positive difference to the claims experience of their customers.
Why is it beneficial?
Insurers demand high levels of forensic evidence in support of claims. When a loss is notified, insurers may appoint a large number of experts to investigate all aspects of the claim in great detail. The burden of proving the claim falls squarely on the insured who has to fully evidence and document both the cause and value of the loss. This is at precisely the same time as their primary focus is on business recovery, maintaining existing contracts, their customers and reputation.
Many insureds expect that presenting spreadsheets itemizing the claim or a schedule of invoices and estimated losses is sufficient evidence of their loss but the reality is very different. Insurance policies incorporate conditions that insureds must comply with to substantiate their claim. They must provide full and granular evidence of the losses sustained which will typically include information such as supplier and customer contracts, estimates, invoices, purchase orders, financial accounts, stock details, historic budget, actual and forecast revenue and business trend analysis. Insurers may also request other evidence as may be appropriate to the particular circumstances of loss.
Providing raw data alone is not sufficient – all documentation must be fully explained and properly presented under the relevant heads of cover.
Failure to evidence the claim to the insurer’s satisfaction can lead to protracted negotiation and a reduced settlement – resulting in disappointment and dissatisfaction that the policy did not respond as expected.
Appointing an expert who understands the working practices and information requirements of the insurance market and who can apply this knowledge on behalf of the insured to deliver an effective and expedited claims settlement process is therefore of immense value.
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For more information, please contact Candy Holland, Managing Director, Echelon Claims Consultants on +44 (0)20 7558 3230 or contact Gary Cordess, Claims Team Leader, Cargo on +44 (0)20 7558 3012